Beauticians lose BI disputes as link to shut-down orders fails
Beauticians in the Victorian regional city of Bendigo and Melbourne’s Altona Meadows have lost disputes over cover for shut-downs during the pandemic because the State Government orders were not “as a result of” virus outbreaks within 20km of their businesses.
The Australian Financial Complaints Authority (AFCA) decisions in favour of Suncorp follow an industry test case on business interruption policies where the Federal Court made orders across a range of wordings involving ten separate claims. Some of the matters were also heard on appeal.
In line with the court rulings, AFCA says Victorian restrictions on non-essential activities required beauty salons to close, and it’s reasonable to accept, for the purpose of the complaints, that covid outbreaks most likely did happen within a 20-kilometre radius of both the Altona Meadows nail and beauty business and the Bendigo beautician premises.
But the claims fail to establish that the Victorian order was made specifically “as a result of” infectious or contagious human disease at either premises, or within a 20-kilometre radius.
“The orders were the result of a government’s concern for the public health risk that Covid-19 presented to the state,” AFCA says in separate decisions on both disputes.
There’s no reference to either complainant’s premises or surrounding area, and no specific government orders specifying business locations, it says.
Even if the complainants were able to show the government orders were a result of an outbreak within their areas, exclusions in both policies citing the Biosecurity Act and relating to a biosecurity emergency would apply, AFCA says.
The Bendigo salon’s policy initially cited the repealed Quarantine Act, but a supplementary product disclosure statement (SPDS) was issued on February 25 2019 and included in a renewal pack sent in February 2020.
The complainant says the insurer failed in its duty of care by taking so long to update the policy after the Quarantine Act 1908 was repealed in 2015, and the insurer should have included reference to the Biosecurity Act in the product disclosure statement (PDS) not the supplementary document.
“I agree with the complainant that the time taken to update the policy after repeal of the Quarantine Act 1908 was excessive however this does not mean the insurer cannot update the policy,” the AFCA decision says.
“The complainant does not dispute receiving the SPDS. The SPDS modifies the PDS and the insurer is entitled to rely on the terms of the policy as modified by the SPDS.”